- Understand Your Credit Report
The first step in improving your credit score is to understand what factors are impacting it. Obtain a copy of your credit report and review it with your mortgage broker. They can help you identify any negative factors, such as missed payments or high credit card balances, and develop a plan to address them.
- Pay Your Bills on Time
One of the most important factors in your credit score is your payment history. Late payments can have a significant impact on your score, so it’s important to pay your bills on time. Set up automatic payments or reminders to ensure that you don’t miss any payments.
- Reduce Your Debt-to-Income Ratio
Your debt-to-income ratio is the amount of debt you have compared to your income. Lenders prefer to see a low debt-to-income ratio, as it indicates that you have enough income to cover your debts. If your debt-to-income ratio is high, work with your mortgage broker to develop a plan to pay down your debts.
- Avoid Applying for New Credit
Each time you apply for credit, it can have a negative impact on your credit score. Avoid applying for new credit, such as credit cards or car loans, while you are working to improve your score.
- Dispute Errors on Your Credit Report
Errors on your credit report can have a negative impact on your score. If you notice any errors, such as a missed payment that you actually made on time, dispute them with the credit bureau. Your mortgage broker can help you navigate this process.
- Consider a Secured Credit Card
If you have a poor credit history, it can be difficult to get approved for a traditional credit card. A secured credit card is a good option for building your credit. You put down a deposit, which serves as your credit limit, and use the card to make purchases. Make sure to pay your bill on time each month to improve your credit score.